With the number of builders in our area going bankrupt it causes me some concern with the standard builders contract. The builders contract calls for a nonrefundable deposit to be paid to the builder upon acceptance of the contract. This money does not go into an escrow account but is commingled with the builders opperating funds.
What protection are we giving our clients if the builder goes bankrupt? There have been enough builders in my area to go out of the industry in the past year to make me think this over.
The deposit money needs to be placed in a brokers escrow account and held for disbursement at closing. The buyer should not pay for upgrades as they go along but have them made as change orders and up the purchase price with an addendum to the contract.
The builders may not like it but who do you represent the builder or your client?
With the deposit money held in an escrow account it would not be in the builders funds and if something happens to the builder the money would be available to be returned to the buyer.
I sure don't want my buyers to end up with a wonderful newly built home that looks like this.
Thanks a lot and any thoughts you have would be great to hear.
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